Correlation Between GoldMining and Take Two

Can any of the company-specific risk be diversified away by investing in both GoldMining and Take Two at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GoldMining and Take Two into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GoldMining and Take Two Interactive Software, you can compare the effects of market volatilities on GoldMining and Take Two and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GoldMining with a short position of Take Two. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Take Two.

Diversification Opportunities for GoldMining and Take Two

-0.03

Correlation Coefficient

GoldMining  Take Two

Good diversification

The 3 months correlation between GoldMining and Take is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive and GoldMining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GoldMining are associated (or correlated) with Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of GoldMining i.e., GoldMining and Take Two go up and down completely randomly.

Pair Corralation between GoldMining and Take Two

Assuming the 90 days trading horizon GoldMining is expected to under-perform the Take Two. But the stock apears to be less risky and, when comparing its historical volatility, GoldMining is 1.09 times less risky than Take Two. The stock trades about -0.08 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  18,838  in Take Two Interactive Software on November 29, 2024 and sell it today you would earn a total of  1,974  from holding Take Two Interactive Software or generate 10.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.13%
Values	Daily Returns

GoldMining  vs.  Take Two Interactive Software

GoldMining

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Take Two Interactive

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Take Two may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with GoldMining and Take Two

The main advantage of trading using opposite GoldMining and Take Two positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Take Two can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Take Two will offset losses from the drop in Take Two's long position.

The idea behind GoldMining and Take Two Interactive Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.